Indonesia, Japanese buyers still negotiating LNG delivery price

Indonesia may have to deliver LNG to a group of Japanese buyers known as Western Buyers, on CIF rather than FOB basis and both parties are negotiating the price of the fuel on the CIF basis, governmental officials said on Thursday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro told Petromindo.com via phone that Indonesia and the Japanese buyers had agreed on the price of the fuel on FOB basis but no agreement had been reached regarding the price on CIF basis.

Under the FOB system, Japanese buyers will provide vessels to take the fuel from Indonesia, while under the CIF system, Indonesia will carry the fuel to Japan.

Indonesia and the Western Buyers recently agreed to extend the contracts that are due to 2011 for another 10 years with a lower contract volume. Under the existing contracts, Indonesia has to export 12 million tons per year the Western buyers. Under the contract extension, Indonesia will export a total of 25 million tons ? three million tons in the first five years and two million tons in the last five years ? over a period of 10 years until 2021.

Iin Arifin Takhyan, Vice President Director of state owned oil and gas company PT Pertamina, which handles the marketing of Indonesian LNG, earlier told the House of Representatives that Indonesia and the Western Buyers had agreed to value LNG that Indonesia would export after the contract extensions at $16 per million British thermal unit (MMBTU) FOB if crude oil is priced at $100 per barrel. The price will be up and down along with the fluctuation of crude price.

A senior official at oil and gas upstream regulator BPMIGAS however told Petromindo.com on Thursday that the FOB price of the LNG that had been agreed upon by Indonesia and the Western Buyers is $15.9 per MMBTU, not $16 per MMBTU, if the crude price is $100 per barrel.

?There are several terms which both parties have yet to agree upon. Indonesia may have to carry the fuel to Japan using its own transportation means,? the BPMIGAS official said. (Godang)